Call (800) 735-1031 or click here to begin the process immediately!

Reverse Exchanges

Improvement Exchanges

Partnership Exchanges

Master Like Kind Exchanges

One of the points we always make in our seminars and workshops is, "you never sell and buy real estate if you can perform an exchange." It is clear that, even with capital losses and suspended losses to offset gain, an exchange is preferable to paying taxes on the unprotected equity. For a single owner of property, exchanges are quite simple. A telephone call to a qualified exchange facilitator and the exchange is practically done. Exchanges may be more difficult if property is owned in a partnership.

Partnerships take many forms. There are general partnerships, limited partnerships, joint ventures, joint tenancy, corporations, etc.. The I.R.S. recognizes a partnership as a single entity, a single person. This "person" may exchange real estate, but the individuals who make up the partnership may not exchange their individual shares. This creates a problem when one or more persons wish to break out of the partnership and go on their own without paying capital gains tax. There is an exception to this restriction. If ownership is held in tenancy-in-common, the I.R.S. will consider that each owner holds the equivalent of a separate piece of real estate and can trade that piece for another property of their own.

Since exchanging creates much more wealth than buying and selling, it would seem that investors should always use the tenancy-in-common form of partnership when buying property with several people. In fact, this is a common practice among exchangors. However, partnership are formed for different reasons, that is why there is so much variety. Each form of partnership has advantages and disadvantages which should be reviewed and compared to the benefit of tax deferral. It is important to meet with a qualified real estate attorney to review the differences among various forms of ownership and to draft the tenancy-in-common agreement

Many investors are in a partnership or wish to enter one which is already formed. If their partnership is not a tenancy-in-common, it may be possible to convert. General partnerships and joint ventures may be converted with little problem. Limited partnerships, corporations and the like cannot usually be converted. A tax attorney can help determine if it is possible to convert a particular form of ownership. If an investor wishes to join a partnership which is not a tenancy-in-common, such as a limited partnership, he may form a tenancy-in-common with the partnership. The limited partnership may sell or exchange its undivided interest and the Exchangor can exchange his separately. It is possible to create a tenancy-in-common with or between any form of partnership. Each legal "person" retains the ability to exchange his ownership interest.

A great deal of confusion and misinformation is generated by partnership exchanges. If rapid wealth-building is the reason for investing, then the tenancy-in-common should be the preferred form of partnership. To use the procedure properly, retain a qualified attorney to form the partnership and a qualified facilitator to perform the exchange.